29061_hrg.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF MORNING VIEW WATER CO., INC. TO REVISE AND INCREASE RATES CHARGED FOR WATER SERVICE AND TO AMEND CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY NO. 314.

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CASE NO. MNV-W-02-1

NOTICE OF AMENDED APPLICATION

NOTICE OF SCHEDULING

NOTICE OF PUBLIC WORKSHOP

NOTICE OF HEARING

ORDER NO. 29061
On April 26, 2002, Nolan Gneiting, President of Morning View Water Co, Inc. (Morning View; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting authority to increase rates for water service by $30 a month, an increase of 136%. Current authorized tariff rates for Morning View are a $22 per month flat-fee plus a public drinking water fee of $6.67 per year. Base rates have not been changed since June 21, 1990. The Company alleges that its fees and expenses have increased and includes three years of accounting data with its Application. Morning View provides water service to 56 customers. The Company proposed effective date of June 1, 2002 was suspended by Commission Order No. 29027.
On May 15, 2002, the Commission issued Notices of Application and Modified Procedure in Case No. MNV-W-02-1. The deadline for filing written comments was June 5, 2002.
On May 31, 2002, the Company by way of Amended Application filed a letter requesting that its Certificate of Public Convenience and Necessity No. 314 be amended to include all areas presently served. Reference IDAPA 31.01.01.112.
Comments on the Company’s proposal to revise and increase rates were filed by Commission Staff and a number of the Company’s customers.
The comments can be summarized as follows:
Commission Staff
Based on its investigation Staff recommends that an annual revenue requirement of $22,028 be approved for Morning View Water. This equates to an increase in pro forma gross revenues of 49% or $7,244. In developing its recommendation Staff annualized and normalized certain items such as revenue, water testing expense, etc. and provided for expenses not actually incurred but reasonable such as a management allowance of $4,160 and a maintenance allowance of $2,496. Based on its analysis of seasonal water usage Staff recommends that the monthly rates for Morning View Water be established by lot size as follows:
Lot Size No. of Customers Monthly Rate 0 Acre – 0.4 Acre 2 $22.00 0.4 Acre – 0.8 Acre 30 $29.75 0.8 Acre and Larger 24 $37.50
Staff notes that Morning View Water has not filed an annual report with the Commission since 1991. Mr. Gneiting owns three separate business entities. (1) Morning View Water Co. (utility), (2) Morning View Homes (Real Estate Company), and (3) LandCo Building and Development Co. (land development and home construction). Staff states that Mr. Gneiting does not adequately segregate his various business activities and accounts. In the course of its investigation, Staff discovered that the Certificate issued Morning View has a typographical error identifying the service territory to be within Section 30 Township 4 North, Range 38 East. The Range is incorrect and should be 39 East. Staff also learned that the water system has expanded beyond the service area approved by the Commission. On May 31, 2002, the Company filed a letter requesting a revision to its Certificate to include the expansion area. Reference IDAPA 31.01.01.112.
In its comments Staff includes an analysis of the Company’s results of operations, rate base, depreciation and revenue requirement, and rates and system design. Staff adjustments include items that should be capitalized as investment rather than expenses, personal expenses of the owner, expenses that should be shared with other business entities, and property taxes. The rate base recommended by Staff is $6,373.66. The depreciation expense on these assets is $596.79 annually. A 12% return on the rate base produces a return requirement of $764.84. The tax gross-up on the return results in a pre-tax requirement of $978.99. The pro forma 2001 operating expenses of $20,452.24 and the depreciation expense of $596.79 are added to the return to produce a total revenue requirement of $22,028.02.
Staff advised that recovery of the $22,028 recommended annual revenue requirement from all 56 customers using a uniform flat rate would require an increase from the current rate of $22 per month to $32.78 per month. This is an increase of $10.78 per month or 49%. The rate design proposed by Staff based on lot size results in zero increase for the 2 customers on quarter acre lots, a 35% increase for the 30 customers on ½ acre lots and a 70% increase for the 24 customers on one acre lots. Staff notes that complete equity in water bills is only achieved when every customer is metered and every customer pays only for the water used. The estimated cost for meter installation is approximately $300 per service location. If additional water supply is needed or water pressure falls to unacceptable levels, even with such practices as alternate day lawn watering, Staff recommends that all customers be metered. Staff recommends that Morning View consider planning to transition to meters in the next two or three years.
Staff in its comments makes the following additional recommendations:
Cancellation of the “Schedule 1—public drinking water fee” tariff. The DEQ fee has been incorporated in the over-all revenue requirement recommended by Staff so a separate fee is not necessary.

Approval of a $25 reconnection charge (Schedule 2—Miscellaneous Charges).

That the Company’s 150 gpm well be connected to the system and be operational within 30 days to avoid prolonged outages when the large well (400 gpm) equipment is in need of repair.

That Morning View be required to bring its bills and disconnect notices into compliance with the Commission’s Customer Relations Rules and Customer Information Rules.

That the Company cease its practice of assessing a “finance charge” or late payment fee on past-due bills. No such fee has been approved by the Commission.

That the Company discontinue use of its presently drafted “Utility Agreement.” The Agreement goes beyond the scope of an application for service and contains inaccurate information.

That the Commission correct the Company’s existing Certificate No. 314 to properly identify the Company’s original service area to be within Section 30, Township 4 North, Range 39 East.

That the Commission notice the Company’s intent to amend its Certificate No. 314 to include the North ½ of the Northwest Quarter of Section 30, Township 4 North, Range 39 East (the expansion area).

Customer Comments
Three petitions from customers of Morning View Water have been received. One petition was signed by 39 households; each of the other two petitions were signed by 19 individuals. The total number of signatures on the three petitions is 77. A more recent customer list shows that the Company has 56 customers. Some customers readily acknowledged signing multiple petitions. In addition, 11 written comments were filed.
Many customers request that the Commission hold a hearing in this case. Customers expressed concern with the magnitude of the requested increase. They are also concerned about a lack of water pressure, the number of times water is totally off, the slowness of repair when there is a problem, the safety of the water supply, and the validity of the system costs as reported by the Company.
YOU ARE HEREBY NOTIFIED that Morning View by way of Amended Application proposes to amend its Certificate of Public Convenience and Necessity No. 314 to include all areas served. Reference IDAPA 31.01.01.112.
YOU ARE FURTHER NOTIFIED that the Commission after reviewing the filed Comments finds it reasonable to establish the following scheduling for Company Reply Comments, public workshop and public testimony in Case No. MNV-W-02-01:
The deadline for Morning View Water Co, Inc. to file Reply Comments is Friday, July 5, 2002.
On Monday, July 15, 2002, the Commission Staff will conduct a public workshop to discuss the Company’s Application for an increase in rates and charges and its proposal to amend its Certificate and Commission Staff’s comments and recommendations regarding same beginning at 6:00 P.M. AT THE RIGBY SENIOR CITIZENS CENTER, 391 COMMUNITY LANE, RIGBY, IDAHO 83442. [phone]. Thereafter commencing at 7:30 p.m. at the same location, the Commission will conduct a hearing for the purpose of receiving public testimony on the Company’s Application to increase rates and charges and the Company’s proposal to amend its Certificate to include all areas presently served.
YOU ARE FURTHER NOTIFIED that the Application in Case No. MNV-W-02-1 and the comments and recommendations of Commission Staff regarding same can be reviewed during regular business hours at the Idaho Public Utilities Commission, 472 West Washington Street, Boise, Idaho and at the office of Morning View Water Co, Inc., 3996 East 200 North, Rigby, Idaho. In addition, the Application and Staff Comments may be reviewed by accessing the Commission’s website at www.puc.state.id.us under the “file room” icon and selecting the appropriate topic heading.
YOU ARE FURTHER NOTIFIED that the workshop and hearing in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act (ADA). Persons needing the help of a sign language interpreter or other assistance in order to participate in or to understand testimony and argument at a public hearing may ask the Commission to provide a sign language interpreter or other assistance at the hearing. The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
E-Mail: [e-mail]

YOU ARE FURTHER NOTIFIED that the Company’s proposal to change its rates and charges for water service in this case is subject to the Commission’s approval. The Commission may approve, reject or modify the requested changes in rate schedules. The Commission may determine Morning View’s rates and charges in an amount other than proposed by the Company and/or the spread or allocation or relative increase or decrease in any rate or charge may be other than that proposed by the Company.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and that the Commission may enter any final Order consistent with its authority under Title 61. All proceedings in this matter will be conducted pursuant to the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED and the Commission does hereby adopt the foregoing schedule for Company Reply Comments, public workshop and public testimony in this matter.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of June 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:MNVW0201_sw2

NOTICE OF AMENDED APPLICATION
NOTICE OF SCHEDULING
NOTICE OF PUBLIC WORKSHOP
NOTICE OF HEARING
ORDER NO. 29061 1

Office of the Secretary
Service Date
June 20, 2002